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The European Commission ruled that Ireland should be paid as much as €13 billion by Cupertino, California based Apple, Inc.
Following an investigation of three years, the commission concluded that Apple’s tax benefits in Ireland were illegal.
The Commission in a prepared statement said that Ireland had enabled Apple to pay far less taxes than other companies. The group said Apple paid an effective corporate rate for taxes of 1%.
Apple and Ireland both have said they are not in agreement with the penalty and would both appeal it.
The EC Commissioner Margrethe Vestager said the member states are not allowed to give any tax benefits to a selected group or one individual company. She called that illegal under state aid regulations in the EU.
In Ireland, the standard rate for corporate tax is just 12.5%. The investigation by the Commission concluded that Apple effectively paid just 1% on its profits made in Europe during 2003 and only 0.005% for 2014.
Vestager said the tax agreement that Apple and Ireland reached meant the company’s taxable profits were not economic reality.
Apple, in response to the Commission’s ruling, said it was harmful for jobs. The company statement added that the EC launched an effort of rewriting the history of Apple in Europe, ignoring the tax laws of Ireland and upending the tax system internationally.
The case the Commission has brought is not about the amount Apple pays, it is about the particular government that is collecting the money. The statement continued by saying this would have a harmful and profound effect on job creation and investment across Europe.
The statement concluded by saying Apple follows all laws and pays all of its taxes wherever it operates and we are appealing the decision and feel confident that the EC decision will one day be overturned.
The government of Ireland held a view that was similar to Apple’s. Michael Noonan the finance minister in Ireland said he profoundly disagreed with the decision of the EC.
He said he would seek the approval of the cabinet to appeal the decision, as it is necessary in defending the country’s integrity of its tax system to provide the tax certainty to business, while challenging the EU state aid rules encroachment into the sovereign state competence of taxation.
The tax bill the EC charged Apple with paying, should not cause them any cash flow problems as it earned a $53 billion net profit during its 2015 financial year.